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Addiction always has a price. Despite a new government assuming power, Pakistan’s addiction to foreign debt continues. In the past 20 years, more than 13 billion dollars have been borrowed by Pakistani governments from the International Monetary Fund (IMF) to run their affairs. And despite the temporary relief provided by the Saudis to Imran Khan’s government, the downside to our lending addiction is that utility prices will most likely have to be increased soon. There is no such thing as a free lunch, certainly no loans without strings attached. Political parties in power may change, but Pakistanis remain on the hook for paying off foreign debt.

Energy is instrumental for Pakistan’s economic growth and prosperity, that much is clear. We humans do not create any original energy in our universe — the law of conservation of energy that we are taught in school. We can only convert the available universal energy from one form to another — electricity being a high-grade form of it. Once you let this fact mentally sink in, you begin to understand the urgency of using renewable sources and recyclable materials for electricity generation, rather than the one-off burning of fossil fuels. The latter process is ultimately unsustainable and has severely damaging consequences, while it lasts, for our shared, finite planet.

For a country bristling to break its financial shackles, the economic empowerment of its people is critical. The uncertainty of rising electricity tariffs is a major burden for Pakistani households and businesses. The price hikes come despite being told that burning fossil fuels for electricity is the cheapest and easiest option available. That is simply not true.

Like every other country, Pakistan’s electricity planning needs to move towards an optimal utilisation portfolio of its sustainable natural resources given three essential biophysical constraints: land, air and freshwater. Financial planning and engineering of the electricity infrastructure must be aligned to the development of such a portfolio.

With every tranche of a financial bailout from the IMF, the government of the time has increased prices of utilities to satisfy conditionalities. But with people’s purchasing power at a low, a rethink of Pakistan’s energy needs is urgently required

Two useful targets to guide the strategy are (1) the yearly total electricity generation per unit capita, an indicator of the electricity needed to satisfy the whole population; and (2) yearly renewable energy extraction per unit area of the country’s land, a measure of how the nation’s cheapest, cleanest and longest-lasting natural reso­urces are being used. The basic principle is to maximise (1) from (2), as the first and foremost priority, before resorting to more financially and ecologically stressful sources.

Status quo

Source: Pepco Pakistan

Reportedly, Pakistan’s total electricity generation this August was a paltry 14 billion kWh. August is a particularly good month for electricity generation because of the large hydroelectric component (over 30 percent of the total), when the yearly rainfall pattern and melting snows from the glaciers up north combine for the highest water levels in the major dam reservoirs. Let’s be overly generous and extrapolate this peak monthly production to an annual sum of ~168 billion kWh, coming to a yearly 834 kWh per capita and renewable energy contribution per unit land area of 0.047 kWh/m2.

This year, Germany’s renewable energy contribution has overtaken its combined coal power production from lignite (the softer, dirtier type as is found in Thar) and anthracite (the more energetic hard version). Wind turbines and solar photovoltaics (PV) have been mostly responsible for an annualised 208 billion kWh — a yearly 2,526 kWh per capita (three times Pakistan’s grand total) and 0.58 kWh/m2 (more than 12 times Pakistan’s renewable energy extraction per unit area). Germany is now delivering more electricity to its citizens from internal renewable energy sources alone than Pakistan does from all its imported fuels, dinosaur hydroelectric dams and other means. Most of this new power conversion capacity has been deployed over the past decade, using readily available technology that can now be sourced even more cheaply.

Renewable energy options for now and the near future

Pakistan can and should quickly surpass the 208 billion kWh per annum (p.a.) renewable energy output of Germany, considering it is well over twice the size, has far greater unused land to work with, and has diverse geographical conditions for different types of renewables. The industrial technology required for a renewable energy base is widely available from multiple global sources, so its planning and deployment is just a matter of intelligent, diligent procurement.

Solar photovoltaics (PV) is by far the most abundant, quickest to install and cheapest electricity source for every Pakistani province. A standard fixed-tilt PV system would produce 140 kWh/m2 just about anywhere in the country. If you consider the nationwide barren land or empty rooftops, Pakistan can easily deploy 100x billion kWh per annum of PV. You need about 175,000 acres per 100 billion kWh, less than 0.1 percent of Pakistan’s total land footprint. Since Pakistan receives about twice the solar irradiation per unit area as Germany, its land requirements for the same amount of electricity are about half.

Would this daytime electricity from solar PV be affordable? According to publicly available information, several project developers have offered to deliver solar electricity to the Pakistani grid at all-inclusive prices below 6 US cents/kWh — much lower than the power purchase agreement tariffs for coal. Since these offers, the raw capital cost of solar PV systems has dropped by another 15 percent to below 80 US cents per Watt-peak capacity. Solar electricity costs keep sliding with manufacturing economies of scale. It’s safe to say that no fuel-based power can price compete with solar for Pakistan.

The opportunity cost of not using empty land for cheap solar electricity is tremendous. Every day that passes, Pakistan is losing 100x billion kWh of solar electricity that could have been cheaply delivered to satisfy unmet demand and drive economic growth. Upfront financial capital for the solar PV deployment is not a showstopper. In the Independent Power Producer (IPP) business model, the IPP arranges the upfront capital for turnkey installation of the solar PV system and is paid back by the government purchasing authority at an agreed tariff per kWh over a 25-year period. Since there is no fuel required for the solar asset’s operation, there is no fuel price volatility and hence financial uncertainty about the actual kWh output cost. Most importantly, there is no foreign exchange pressure of fuel imports on the national current account.

Wind energy is another abundant option and as cheap, if not cheaper, than solar PV in areas with high wind velocities. The cost and generation potential for this source varies with the cube of wind velocity (you typically want an average of over 5.5 m/s). Commercially feasible areas for onshore wind farms will be less than solar PV but still plenty in a land as vast as Pakistan. Offshore wind in the warm, shallow waters along Pakistan’s 1,046 km long coastline is a particularly attractive option. Germany’s onshore and offshore wind production has crossed 95 billion kWh per annum and 19 billion kWh per annum respectively, from about 0.45x the total land size and 2.3x the coastline length of Pakistan. With a similar if not wider range of geographical opportunities to choose from, Pakistan can pull over 100 billion kWh per annum of wind electricity.

The primary hurdle to renewables is well entrenched fuel importers, their political and bureaucratic lobbying power, with international tentacles of support. They might like some renewable energy in the total mix, but only so much that it doesn’t rock their main gravy train.

Mahmud Yar Hiraj from Baltoro Growth Fund, a private equity firm actively investing in Pakistan, notes: “Baltoro has had a favourable experience with its investment in Triconboston, a 150 MW wind farm located in Jhimpir, Sindh, attracting international financiers, such as the Asian Development Bank, International Finance Corporation, German Investment Corporation DEG, and Islamic Development Bank to participate in the project.” The fund partner adds that Pakistan needs to rely more on its vast indigenous resources, such as wind and solar, by developing clean energy investment opportunities which are both financially appealing and environmentally sustainable.

Other noteworthy options include biomethane from organic waste, geothermal, tidal energy, and hydroelectric. The first and last options will be discussed in a bit more detail later. Biomethane from organic waste feedstock, aka renewable natural gas (RNG), is particularly interesting, as it offers a pathway to complete substitution of fossil fuels in a variety of applications. RNG production uses commercially tried and tested, scalable technology. Anaerobic digestion of the waste, conveniently combined with wastewater, yields a gaseous mixture of methane and impurities which are scrubbed away to leave behind the biomethane. The digestate of residual solids from the process is sold as valuable fertiliser, while the wastewater effluent can be recycled with reduced contaminants. The purified RNG is functional in the same way as natural gas for combined heat and electric power production. Alternatively, it can be injected into a national gas grid network.

RNG electricity has been steadily increasing in the EU, rising from 12.5 billion kWh in 2005 to 46 billion kWh in 2012 to an expected 64 billion kWh in 2020. By contrast, Pakistan’s electricity generation from liquified natural gas (LNG) imports, annualised from figures for July and August, stands at 38 billion kWh. Organic waste and wastewater collection in Pakistan can be organised, as in the EU, to dent the LNG import bill. As Pakistan’s population keeps increasing (already 40 percent of the EU), its organic waste feedstock will only expand.

Solar panels installed, near Mithi, in one of the approximately 480 reverse osmosis plants across Tharpakar | White Star

What’s the cost of RNG electricity? The calculation is not as simple as for solar or wind, as it depends on a broader range of factors, but one can make useful comparative estimates. The UK’s current feed-in-tariff (i.e. purchasing price) for RNG electricity from anaerobic digestion plants, of larger than 500 kW capacity, is 1.57p/kWh — that comes to 2 US cents/kWh or Pak Rs 2.5/kWh. Clearly, the economics is a thumbs up.

What about hydroelectric power? There are two primary types of hydropower: the first is storing the water from a river in a dam’s reservoir as potential energy (that scales with the volume and height of the stored water) to be later released as electricity, and the second is running the kinetic energy of a river through a turbine, with or without a dam, to produce the kWh. Both approaches have troublesome handicaps.

The catch is annual rainfall levels, the quantity and certainty. For Pakistan, the renewable amount of river water from internal sources will depend on the summer monsoon and melting snow from its glaciers over the summer, replenished by the winter monsoon. The total monsoon tally isn’t much. Pakistan is down at 140 or so, on the global list, in average annual rainfall. No country with a greater population ranks below it.

For mega dams, the opportunity cost of the diverted freshwater should be an obvious concern. You are taking water away from the downstream use of irrigation and other basic human needs, to store in the dam reservoir, drastically altering the natural ecosystem. More water is lost from evaporation in the reservoir, than the natural flow of the river. A hydroelectric dam isn’t ideal for flood control, since you need a full reservoir for maximum power capacity. A host of other problems are well documented, including the worsening water quality, adverse hydrological changes, infectious diseases, reservoir sedimentation and even greenhouse gas emissions. In addition, a mega hydroelectric dam must be avoided like the plague in an earthquake-sensitive zone, where there is a risk of reservoir-induced-seismicity.

Run-of-river hydropower (aka small hydro) may avoid most of these problems, with smaller reservoirs if any to support their operation, but some negative downstream effects are unavoidable. With poor regulation and planning, the effects can be worse than large hydro. Run-of-river needs a close-to-steady flow-rate and is more vulnerable to seasonal variations.

There is a trade-off between planning specific-purpose reservoirs, dams, weirs and canals for irrigation and flood control on the one hand, and multi-purpose hydroelectric dams on the other. Pakistan can circumvent this trade-off by prioritising solar, wind, and RNG for the core of its national electricity portfolio.

Energy storage

Energy storage is not a cumbersome cost necessitated by renewable energy, as the fossil fuel industry would like you to believe. It’s an essential component of all electricity planning. Thermal power plants also need energy storage back-up, for scheduled and unscheduled downtime, for example when the plant trips. The truth is, these plants are less reliable in guaranteed uptime than their renewable energy counterparts. The bigger the plant, the bigger the energy storage back-up requirement.

The temporal variability of electricity generation by solar PV and wind is a red herring for policymakers. Financially, the variability has already been factored into the per kWh purchasing price. As for unpredictable weather impacts on the kWh output, the spatial distribution smoothes out individual, short timescale fluctuations. The greater the number of solar PV and wind systems, the more predictable is the aggregated output.

To buttress its electricity generation, Pakistan needs to cleverly plan energy storage — a diverse portfolio in terms of power capacity versus storage duration. A new global trend is to use renewable energy plus storage as a cheaper, more flexible substitute for fossil fuel power plants (known as “peakers”), to meet peak periods of excess electricity demand.

Energy storage systems offer a menu of services such as load shifting, emergency backup, network congestion relief, voltage and frequency control for grid stability. Different types of commercial energy storage include batteries, supercapacitors, flywheels, thermal capture, compressed air, and pumped hydro. In recognition of its growing importance, the World Bank has just announced a one billion dollar fund for battery systems in developing and low-income countries.

Pumped hydro is receiving increasing attention as a grid-scale complement to renewable energy, with low operational costs and long storage duration. An advantage of pumped hydro over the aforesaid hydroelectric dams is that it does not have to interfere with river irrigation. It can be independently operated in what is called a closed-loop system. You can locate these facilities near a renewable energy generator or consumption cluster, and even use seawater instead of freshwater. A 225 MW seawater pumped hydro facility is being planned in the peninsula of South Australia. Similar opportunities can be explored along Pakistan’s coastline, with an innovative addition of water desalination powered by renewables.

The roadblocks

Source: Vivantive

Although the prescription is straightforward enough, with little technical risk, bankable economics and a most competitive arena of companies ready to deliver the required assets, it’s unlikely to be easily accepted and administered. The primary hurdle is well entrenched fuel importers, their political and bureaucratic lobbying power, with international tentacles of support. They might like some renewable energy in the total mix, but only so much that it doesn’t rock their main gravy train.

On the other hand, we have the champions of local fossil fuels, trying to copy the riches of Western corporations in the receding past. The talk of “indigenous fuels” by the backers of Thar lignite is a road to economic failure — there is no “black gold” here but “fool’s gold”, a low-energy form of coal that will do more harm to its surrounding ecosystem than good to the economy.

The fear of the incumbent energy market gatekeepers, well fed from generous capacity payments and lucrative long-term supply contracts, is understandable. Renewable energy is a disruptive threat to their extravagant, government-subsidised profits — financially and technically, it squeezes out the demand for costlier fuel-based power. If Pakistan wants affordable energy self-sufficiency, then its government has to choose the road of renewables, and bulldoze the roadblocks. The choice of one road leads to economic salvation, while the others to financial bondage and, finally, bankruptcy.

The writer is a renewable energy and technology commercialisation expert based in London

THE CASE FOR RENEWABLES

While Germany and other countries had to pay a premium over market rates for renewables to replace fossil fuels, there is no such need for Pakistan. The renewable energy will come cheaper than what is being paid for the equivalent kWh from fossil fuels, and can be financed by domestic public finance, rather than foreign loans. Setting a renewable energy extraction target at three-quarters of what Germany has recently achieved, yields ~ 0.44 kWh/m2, about 350 billion kWh p.a., an additional 1720 kWh per capita (over twice the current level).

Indirect costs: Would save on the capital costs of additional transmission lines, as the renewable energy systems can be deployed closer to the centres of consumption, or in areas where building the additional transmission lines is not so difficult (e.g. in the plains versus a mountainous terrain). Power losses would also be reduced by shorter distances between supply and demand.

Financial volatility: There is no fuel price volatility to affect the projected financials.

Foreign exchange pressure: No fuel imports means less stress on the current account deficit and the Pakistani rupee.

Speed: Renewable energy plants, especially solar PV and wind, are much quicker to commission — the difference is not months but years.

Diversification: Renewable energy assets could be simultaneously developed in every province, to geographically and socially diversify the national electrical infrastructure.

Security and resilience: The greater the diversification, the more robust the electricity supply, resilient against both man-made and natural disasters.

Air pollution: Reduces an established cause of about 6 million premature deaths a year worldwide. Pakistani cities and dense villages are exceptionally affected by air pollution.

Climate change mitigation: The renewable energy portfolio would do the opposite of harming the environment. It would instead bring about positive environmental changes for those living in harsh habitats. Would also help the common global cause of controlling greenhouse gas emissions.

Attraction of foreign clean energy investment: From a growing number of public and private international financial institutions who are making it clear they prefer to fund clean energy projects, many announcing a ban on further funding of coal and the like.

Global branding: Would generate positive publicity for Pakistan worldwide, as a forward-looking economy and progressive nation in the struggle against adverse climate change.

Social satisfaction: Will spur a massive wave of new employment, clean, safe well-paying jobs, as is evident from the renewable energy experience of other countries.

HOW TO MAKE IT HAPPEN

The actions for implementing such a strategy are not that complicated — here are 10 practical steps:

(1) Identify a ranking of locations in each province, most suited to renewables.

(3) Introduce policies for electricity cooperatives, community ownership of remote assets, expansion of net metering and wheeling regulations to include virtual power purchase agreements.

(4) Incentivise a pool of IPPs to invest in complementary grid modernization.

(5) Provide IPPs with the option to invest in hybrid mini-grids for industrial estates, underwriting industry payments to the IPPs.

(6) Make it compulsory for the IPPs awarded with major contracts to invest in a schedule of technology transfer, training, and local content production.

(7) Create a detailed Quality Assurance framework for the renewables assets, with layers of technical, commercial and legal measures for best-in-class risk mitigation.

8) Introduce a Carbon Tax on legacy fossil fuel power producers, to reinvest the proceeds in a Sovereign Renewable Energy Investment Fund.

(9) Market the fund to private and public international financial institutions, including multinational corporations who want to offset their carbon emissions.

(10) Use this investment fund to roll out distributed solar and RNG projects, microgrids, for urban and rural communities, starting from low-income and historically neglected areas.

There is a fork in the road for Pakistan’s government. They can either change direction for a future of clean, cheap electricity, derived from their own land without destroying it, or stumble towards the apocalyptic dead-end of fossil-fuels.

On DawnNews

Comments (20) Closed

Ali

Nov 04, 2018 01:55pm

For base load demand requirements, fossil fuels are still needed.
Lignite coal from Thar isn't the best form of coal, but Germany uses it effectively.
As for the pollution generated - compared to the like of India, Germany, USA and China, the amount we'd be spewing out would just be a rounding error.

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inVader

Nov 04, 2018 02:09pm

It's a well written article and gives a good overall picture of the benefits of introducing renewables in our energy mix. However, the author has missed some very important aspects while comparing the case of Germany and Pakistan. Adding renewables in the electricity mix requires a larger backup of ancillary services or some form of flexibility to mitigate the uncertain production from solar and wind. This requires a significant investment in storage which the author briefly discussed, but skipped completely in the financial analysis.

Another difference between Germany and Pakistan is in the electricity markets. Germany has a deregulated energy market that facilitates loads and other players to contribute towards the flexibility by load shifting and demand response schemes. Pakistan on the other hand has a regulated market structure making it almost impossible for smaller players to contribute with flexibility.

Including the cost of additional storage will give more realistic estimates of renewable integration, and concrete steps are required towards deregulating the grid before we can move in the direction of renewables.

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Farrukh Munir

Nov 04, 2018 06:06pm

Every government opts got quick fix yet there aren’t any quick fixes to our energy projects. So far we haven’t heard anything positive from this present setup about the use of renewable sources of energy. This can be done at small scale projects as well if they agree to purchase electricity from even a “SMALL SOLAR POWER PRODUCER” at rates attractive enough for them do that small solar farms can be developed. I’m out POTHOWAR area alone people will use their unirrigated land to have solar farms but the government needs to develop a policy where the power purchase is mandatory and without commissions by WAPDA officials.

Government is busy borrowing money, which will again be used in mega projects, rather than practical small scale projects where community can be involved.

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Babar

Nov 04, 2018 06:18pm

Articulate and compelling. Here is a case where all (!) that is needed to solve the problem is Government guts. The case has been made, the technoligy is tried and tested, finance can be attracted - but the government has to remove artificial barriers, create a level playing field and declare Pakistan "open" for renewable. Avoid subsidies and kickbacks. Is anyone listening?

Only a rich country like Germany can carry on experimenting with solar electricity. It is such a deficient source of electricity that even in a country like Pakistan where sun shines like hell during summer, a solar plate can produce electricity for 12 hours a day, and massive storage facility in the form of batteries and inverters, that would cost billions of dollars every few years to replace to supply power to a country of Pakistan's size, would be required. That is why only 9% of Germany's electricity needs are filled by solar means. Coal and water-flow are the only cheap sources of power supply for us although the international merchants have created all kinds of hurdles not to let us adopt those means.

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Aatir

Nov 04, 2018 07:42pm

Top notch article well researched and well written. I hope someone from the government reads it.

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ALI

Nov 04, 2018 09:26pm

I had gone to Pakistan with intention to build a 50MW solar plant.
The bureaucracy was a nightmare, as there was not will to do it.

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white noise

Nov 05, 2018 08:23am

This is a great article, someone send it to Imran Khan please?

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SHAHID SATTAR

Nov 05, 2018 11:24am

Will the Germans too oblige and pay up our share of the booty? It must be substantial to cover up for our plea-bargaining with the government agencies later on in case we got caught.

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AK

Nov 05, 2018 11:42am

Just import some from Nepal.

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X

Nov 05, 2018 05:50pm

So the author works for a company that promotes renewables and so has a bias and a conflict of interest when writing this article and not disclosing that, no?

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Nasir

Nov 06, 2018 04:18am

Is the writer comparing Pakistan with Germany ?

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Dr. Sohail

Nov 06, 2018 01:01pm

We need a strong distribution grid to support renewable in-feed, there is much to be done.

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Rameay

Nov 06, 2018 02:33pm

Strongly support Solar PVs cz these are easy to install, off grid, affordable, easily maintainable, flexible.

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jawad

Nov 06, 2018 10:46pm

This is an amazing article. Exactly the sort of technically well grounded and enlightened solution that Pakistan needs in every field and domain.

A point to add here is that China has achieved a phenomenal growth in the production and installation of Solar PV and Wind Turbine based renewable power installations (by far larger than anything in Germany). Currently the runaway growth in China's solar and wind power generation has caused the government to impose "restrictions" on the number and capacity of new solar and wind installations. That is right, China is trying to reduce the pace of installation of solar and wind power installations.

China has excess production capacity of solar panels and is ramping up battery and energy storage system production to record levels, and prices are the lowest ever and continuing to hit rock bottom. A golden opportunity for Pakistan to conclude agreements with chinese companies for the world's cheapest solar & wind plants

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atif khan

Nov 07, 2018 01:22pm

the picture with this article showing solar panels on street polls are on Peshawar ring road. every now and then when i goto peshawar i see these polls the panels are covered with dust like anything and at night hardly some lights are on. pti gov did some rather lots of good measures as i have seen on ground, but major issue is with implementation ..

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Rameay

Nov 08, 2018 11:47am

Appreciate the effort. Solar PV is the only viable solution to our energy crises. Unfortunately, oil Mafia portrays a very grim picture for the renewable. Being sun-belt country solar has a great potential.House holds as a social responsibility through generous loans etc must be encouraged to install PVs at roof tops that would ease load on grid especially during the daylight. Being captive every house hold would take good care of the system besides huge transmission/transformation losses would also be eliminated. So encouragement of masses to install their captive PV systems at their rooftops/open areas is the answer to the problem. Power Savings must also be encouraged through Inverter bases electrical devises, LEDs etc.

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Reader

Nov 08, 2018 12:12pm

P.V. cells optimum operating temperature is about 25 degrees Centigrade, when temperatures increase the output of the P.V. cells decreases. i.e. higher the temperature lower the electricity generated by P.V. cells. Pakistan and Germany cannot be compared temperature wise. Germany has temperate climate, Pakistan has hot climate, specially urban areas like Karachi. Still the gist of the article makes a lot of sense. We in Pakistan have to do a lot of research on our own and not depend on others in manufacturing and installation of the Solar Panels. Start small on residences, and move into rural areas where grid is not available. As mentioned in one of the comments above the government and the bureaucracy is simply too lazy to do anything, it is really up to the private sector as individuals and companies to force their way.

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Reader

Nov 08, 2018 12:23pm

The bottom line in all of this is not Germany vs. Pakistan, it is about knowledge, Germany and all industrialized countries have a knowledge based infrastructure, economy, culture, values, politics etc. Pakistan does not. We lack very basic values that is required for development. The problem is our thinking, our mindset, our way of life, our values, our culture. Like it or not, this our hindrance towards progress, like many other societies around the world.